November 18th, 2008
Yesterday the Port Authority of New York and New Jersey (a delightfully powerful and complex bi-state authority) announced the selection of the architecture firm Rogers Stirk Harbour + Partners to design an office tower on top of the Port Authority Bus Terminal on Manhattan’s west side. The design team, formerly known as Richard Rogers Partnership (which has designed projects including Barajas airport in Madrid, the Centre Pompidou in Paris, the Millennium Dome in London and, for all you lawyers – the European Court of Human Rights in Strasbourg) will be working for 20 X Square Associates, a joint venture of Vornado Realty Trust and affiliates of Lawrence Ruben Company.
For any who have traveled through the Port Authority’s bus terminal, such a redevelopment – which is slated to upgrade bus gates, improve circulation in the terminal, create new retail spaces and give an overall more modern look to the terminal – is a welcome announcement. All the improvements to the terminal will be done beneath a brand new 1.3 million SF office tower, built with the terminal’s unused air rights. The developers will lease the air rights from the Port Authority for 99 years under rental terms that have already been established (a fixed rent to the Port Authority of $344.5 million or $265/SF for the 99 year period as well as a percentage of the net operating income). Such income will be much valued by the Port Authority, which is responsible for PATH train service, the region’s three airports, the cargo port of New York and New Jersey as well as the redevelopment of the World Trade Center site in Lower Manhattan.
This project has been in the works for more than ten years, with many stops and starts along the way. Though selection of an architect means the project is still months and likely years away from really getting underway, it is hard not to wonder whether there is any market for more Class A office space in midtown today. Across the street from the bus terminal, SJP properties has just topped out its 1.1 million SF commercial and retail tower at 11 Times Square. That project, built on spec, is expected to be completed by January 2010, but there are still no reported tenants. Will the Port Authority tower face a similar fate? Or is it far enough off in the future that we can expect better things for New York’s real estate market?